RISMEDIA, January 23, 2010—By now it is well documented that today’s affordable housing prices, historically low interest rates and federal home buyer tax credit have combined to create one of the most attractive first-time buyer markets in recent memory. What many Americans might not realize is that a recent expansion of the buyer tax credit has created an equally desirable opportunity for existing homeowners.

This past November, Congress elected to expand the home buyer tax credit to repeat buyers after seeing the success the temporary financial incentive had on the housing market and overall economy. As a result, current homeowners who will have lived in their home for 5 consecutive years out of the last 8 may now be eligible to receive a $6,500 tax credit.

“The expanded tax credit offers a great financial opportunity for existing homeowners, particularly those looking to trade up,” said James M. Weichert, president and founder of Weichert, Realtors, one of the nation’s largest independent real estate companies. “Not only can you receive a large sum of money from the government, you’ll also likely purchase your next home for less money and at a lower interest rate than you could have in years past or years to come.”

To qualify for the tax credit, the repeat buyer must have signed a binding contract by April 30, 2010 and close on the home by June 30, 2010. Tax credit eligibility is subject to income limits, $125,000 for single buyers and $225,000 for couples. In addition, the sale price of the home being purchased can not exceed $800,000.

There is no requirement that existing homeowners must have sold their home to be eligible for the $6,500 tax credit. However, Weichert encourages existing homeowners who want to benefit from this incentive to move quickly, particularly those who prefer to first sell their current home before purchasing a new one.

“Typically, it takes three months or longer to sell a home. That’s why it is critical repeat buyers put their home on the market right away. Otherwise they might not leave themselves enough time to both secure a buyer for their current house and find a new home by the April 30 deadline,” added Weichert.

The appraisal process often baffles consumers. They may feel that their home is worth a higher dollar amount, and so the appraised value doesn't always make sense to them. It is important to know that the appraiser is completely independent from lenders, buyers, sellers, and real estate agents, and that the guidelines to which they adhere are dictated by the Uniform Standards of Professional Appraisal Practice (USPAP) and Fannie Mae. In most states, the mortgage lenders must also disclose the purpose of the appraisal, as each transaction carries its own set of rules.

In essence, these important guidelines help appraisers put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value.

For example, there is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, but the local marketplace supports the value of a pool at $15,000, then that item will be bracketed as [$15,000] on the appraisal.

Upgrades can usually be expressed at a higher percentage of their value in newer homes because the only way to obtain those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because typically 25-40% of the project involves demolition and the fixing of issues that aren't uncovered until the project has already begun, such as plumbing or wiring that may need updating.

Ultimately, the value of the upgrades must be supported by comparable examples within the same marketplace. These comparisons must be drawn from current market activity within the last six months. This is a safeguard to prevent appraisers from attaching too high a value to the home in question, and opening up the appraisal for review. This guideline further states that appraisers can only base their opinion on the value of home sales that have actually closed.

Published on: Friday, January 15, 2010 By Joe Slaninka

Cut!

In the midst of a looming $608 million budget shortfall in fiscal year 2011, Montgomery County Executive Isiah Leggett proposed $70 million in midyear budget cuts last week that include layoffs, reductions in education spending and the elimination of some Ride On bus routes.

“It is important to understand … I will not recommend exceeding the charter limit on property taxes in the [fiscal year 2011] budget,” Leggett said. “The county’s taxpayers continue to face their own unprecedented fiscal challenges.”

To avoid raising taxes, Leggett proposed eradicating a total of 70 county positions, 44 of which are currently filled. He said the county “will make every effort to appropriately place any affected individuals into vacant positions” and will follow all personnel regulations and labor agreements in the process.

“I think this is the first time we ever had to discuss cuts that involved positions with people actually in them,” County Council President Nancy Floreen said Monday, about potential layoffs. “We’ve never had this discussion before.”

In addition to layoffs, Leggett proposed slashing 39 Ride On bus routes. The routes that face potential elimination would be those that would least affect county residents, officials said. The removal of these routes would save the county a total of $2 million.

The first public hearing at which residents can voice their opinions on the budget is scheduled for Feb. 1 at 6:30 p.m. in the county executive office building, at 101 Monroe St., in Rockville.

Since becoming county executive, Leggett has trimmed a total of more than $1 billion from three county budgets. The fiscal year 2010 budget totals about $4.4 billion.

Last November, the Montgomery County Council made about $30 million in midyear cuts to the fiscal year 2010 budget. If Leggett’s proposal is fully passed, total midyear budget cuts would exceed $100 million.

“This is just a precursor to the fiscal [2011] budget,” Floreen said. “It’s going to be pretty tough.”

Floreen said residents will handle issues they have never had to deal with before so the council will make the budget much more accessible to them by providing budget plans in their entirety on the county Web site, www.montgomerycountymd.gov.

“We get a lot of comment on what we should preserve, but we never get feed back on what not to spend on, and this year should be no different,” she said. “Communication is a huge issue, and we will make ourselves as accessible as possible.”

Bethesda Literary FestivalAdult & Young Adult Writing ContestDeadline: February 26, 2010The Bethesda Literary Festival, scheduled for April ...   more » Leave Comment  |  Permanent Link  |  Cosmos   Dance Bethesda Coming up in February! by Estridge Group on Fri 15 Jan 2010 03:01 PM EST 6th Annual Dance BethesdaDance Concert, Master Classes & Dance PartiesFebruary 26-27, 2010Dance Bethesda, a weekend celebrating dance, ...   more » Leave Comment  |  Permanent Link  |  Cosmos Wednesday, January 13   The Countdown Is On - Buyer's & Seller's Utilizing Tax Credits! by Estridge Group on Wed 13 Jan 2010 11:13 AM EST As we begin 2010, both real estate professionals and home buyers have something to look forward to and more importantly, take advantage of—the extended and expanded home buyer tax credit. Originally created in 2008, the home-buyer tax credit has evolved from a $7,500 credit, which had to be repaid by the home buyer over the course of 15 years, to an $8,000 tax credit with no repayment required in 2009. Now, for a limited time in 2010, the $8,000 home buyer tax credit will still be available to first-time home buyers and certain current homeowners will also be eligible for a $6,500 credit. To help everyone better understand the extended and expanded home buyer tax credit, here are some highlights of the changes. Who can claim the credit? “First-time home buyers” who purchase homes between November 7, 2009 and April 30, 2010 are eligible for the credit. To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase. For current homeowners purchasing a home during the same time frame, they are also eligible for a tax credit, so long as the home being sold or vacated was their principal residence for five consecutive years within the last eight. To elaborate, it must be the same home; it is not enough that they have been homeowners for five consecutive years, they must have been in the same home for five consecutive years. Another key point is that the existing home does not need to be sold. One must, however, occupy the new home as a principal residence and do so for three years or risk recapture of the credit. Also, the new home does not need to cost more than the old home despite the concept that it is directed at “move up” buyers. How much is the credit and what are the income limits? The maximum allowable credit for first-time home buyers is $8,000 or 10% of the sales price, whichever is less. For current homeowners, it is $6,500 or 10% of the sale price, whichever is less. Under the extended home buyer tax credit, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000 may receive the maximum credit. The credit decreases for single buyers who earn between $125,000 and $145,000 and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit deceases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income – over $145,000 for singles and over $245,000 for couples – are not eligible for the credit. What are the deadlines for qualifying for the credit? Under the extended home buyer tax credit, as long as a written binding contract to purchase a home is in effect on April 30, 2010, and the deal is closed by July 1, 2010, one can claim the credit. Will the tax credit need to be repaid? No, the buyer does not need to repay the tax credit if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount of the credit will be recouped on the sale. Another provision of the law waives the recapture provisions for service members who receive orders that require them to move. Are there any other critical provisions? -There are three provisions people should be aware of: -There is an $800,000 limitation on the cost of the home -The purchaser must be at least 18 years old on the date of purchase -For a married couple, only one spouse must meet this age requirement and dependents are not eligible to claim the credit Finally, as an anti-fraud measure, purchasers must attach documentation of purchase to his/her tax return claiming the credit. Normally this would be a copy of the HUD-1, but could include other documents memorializing the settlement. As with all tax matters, responsibility for complying with the tax code belongs to the taxpayer. Real estate professionals should recommend that their buyers consult their tax professionals to ensure eligibility for the credit and the proper way to claim the credit. For more information including the required IRS forms please contact the Internal Revenue Service at 800-829-1040. Leave Comment  |  Permanent Link  |  Cosmos Friday, January 8   Stay Warm & Safety Tips During Our Cold Wave! by Estridge Group on Fri 08 Jan 2010 11:22 AM EST Bone chilling temperatures have gripped much of the country recently and the American Red Cross urges everyone to be safe ...   more » Leave Comment  |  Permanent Link  |  Cosmos

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